EUR/USD Rises Amid Trade Tensions and ECB Policy Outlook

EUR/USD climbed 0.50% to 1.1694, rebounding from a daily low of 1.1614, as the U.S. Dollar Index (DXY) dropped 0.67% to 97.806. Falling U.S. Treasury yields at 4.64% and looming August 1 U.S. tariff deadlines spurred dollar outflows, boosting the pair. Investors await EU PMI data and U.S. housing and durable goods reports, while policymakers address trade disputes and Federal Reserve uncertainties.

Trade Tensions and Market Drivers

Escalating EU-U.S. trade frictions, with EU diplomats exploring retaliatory measures due to fading agreement prospects, supported EUR/USD’s rise. U.S. Treasury Secretary Scott Bessent noted intensified EU trade talks. Strong U.S. retail sales highlighted consumer resilience despite June’s CPI nearing 3%, though PPI eased slightly. Copper futures rose 0.65% to $5.6410 per pound, while GBP/USD held at 1.3600 (+0.3%), reflecting mixed market sentiment.

Monetary Policy Expectations

The European Central Bank (ECB) is expected to keep rates steady on July 24, with a 62.5% probability, following recent cuts. The Federal Reserve faces pressure as Fed Chair Jerome Powell navigates political accusations. Fed Governor Christopher Waller backed a potential July rate cut but emphasized open deliberation.

Technical Outlook

EUR/USD targets 1.1700, with support at 1.1614. Failure to break 1.1700 may test 1.1570. Investors should track EU Consumer Confidence and U.S. Jobless Claims. Clear U.S. trade policy is vital to stabilize DXY and global markets.